A provocative, unsponsored assessment of current and future legal, regulatory, marketplace, and cultural issues affecting telecommunications and information policy presented by Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law, Penn State University

This is “damning with faint praise”
at its finest, so much so that the author of the decision condescendingly notes
that “even a federal
agency is entitled to a little pride” (p. 20) when after losing the first
case on network neutrality (Comcast v. FCC, 600 F.3d 642 (D.C. Cir. 2010) the
Commission struggled onward to find lawful authority. This decision offers the FCC a generally
worthless victory that the Commission can lawfully find some statutory basis
for jurisdiction over Internet Service Providers so long as the
responsibilities imposed do not constitute common carriage.

The court again reminded the FCC
that having classified Internet access as an information service, the
Commission has no foundation whatsoever to impose common carrier duties:

even though
the Commission has general authority to regulate in this arena, it may not
impose requirements that contravene express statutory mandates. Given that the
Commission has chosen to classify broadband providers in a manner that exempts
them from treatment as common carriers, the Communications Act expressly
prohibits the Commission from nonetheless regulating them as such. Because the
Commission has failed to establish that the anti-discrimination and
anti-blocking rules do not impose per se common carrier obligations, we
vacate those portions of the Open Internet Order. (p.4)

Some network neutrality advocates had expressed hope that
the court would have considered nondiscrimination and anti-blocking rules as
permissible in light of a recent case that approved as non-common carriage
specific interconnection requirements on wireless carriers. In Cellco Partnership v. FCC, 700 F.3d
534, 541 (D.C. Cir. 2012) the court approved the FCC requirement that wireless
carriers negotiate commercial terms and conditions for data roaming, Internet
access via smartphones located outside the customer’s home service territory.The FCC treats all forms of Internet access
as non-common carriage by classifying the offering as an information service.The court affirmed the FCC, because the
imposition of some duties to deal, e.g., providing data roaming, does not rise to
the level of compulsory carriage, particularly because the FCC only required
commercial negotiations and recognized that the duty is not mandatory if
technologically infeasible, or that the terms and conditions be uniform across all
instances of interconnection.

Even with a quasi-common carrier option, the FCC cannot
expressly impose non-discrimination and anti-blocking duties.Section 706(a) of the Communications Act requires
the FCC to “encourage the deployment on
a reasonable and timely basis of advanced

telecommunications
capability to all Americans . . ..” Section 706(b) requires the Commission to
conduct a regular inquiry “concerning the availability of advanced
telecommunications capability” and if it determines that access is not
available on “a reasonable and timely fashion” “to take immediate action to
accelerate deployment of such capability by removing barriers to infrastructure
investment and by promoting competition in the telecommunications market.”

The court determined that the FCC could reasonably interpret
Sec. 706 as providing statutory authority for some degree of private carrier
oversight, despite the FCC having previously determined that this Section
provided no such foundation when the Commission previously sought to classify
ISPs as information service providers entitled to a largely deregulated status.The court defers to the FCC and its later in
time decision to consider Sec. 706(a) as providing a statutory basis for
regulatory oversight: “Does the Commission’s current understanding of section
706(a) as a grant of regulatory authority represent a reasonable interpretation
of an ambiguous statute? We believe it does.” (p.22)

The court accepts the ability of the FCC to change course
and even change factual determinations, as when the Commission determined that
the Internet access market lacked sufficient competition having previously
determined that it did. The court also does not dispute the FCC’s finding that
ISPs have the ability to engage in discriminatory practices: “there appears
little dispute that broadband providers have the technological ability to distinguish
between and discriminate against certain
types of Internet traffic,” p. 38 nor does the court dispute that the Internet
access subscribers cannot or will not quickly change providers if potentially
harmful discrimination actually occurs: For example,
a broadband provider like Comcast would be unable to threaten Netflix that it
would slow Netflix traffic if all Comcast subscribers would then immediately
switch to a competing broadband provider. But we see no basis for questioning
the Commission’s conclusion that end user are unlikely to
react in this fashion. (p.39)

However, the ability to discriminate does not automatically
translate into illegal discrimination particularly when the FCC has determined
that discrimination is something only common carriers cannot pursue.

The FCC may seize upon the approval of its reliance on
Sec. 706 to assert statutory authority to regulate ISPs.However, the Commission will have little
latitude and even less deference to craft quasi-common carrier duties on ISPs. One permissible duty would require transparency and full disclosure of non-neutral service arrangements. The Commission lawfully can require "truth in billing" by private carriers. Perhaps the potential for consumer pushback in response to disclosed sweetheart deals with corporate affiliates and favored ventures might create a disincentive for ISPs not to go overboard.

3 comments:

The market appears to have forgotten that 5 forms of equal access and or mandated interconnection created the digital booms of the 1980s-90s and extended them into the 2000s. That's because most had unintentioned consequences and/or were distorted in hindsight (or misunderstood) as to their original intent.

These 5 were dial-1 equal access, which along with Computer 2, enabled the internet to scale 10 years ahead of most of the world due to low transport costs and extended flat-rate dial-up.

And of course Wifi was never intended for 80% of internet access (which is where it is headed with smartphones, tablets, devices, etc...) and really was an excuse for the Bells to get out of inside wiring by the early 1990s.

That said, we weren't able to implement open access or interconnect uniformly in layers 1-2 through TA96. That was its failure. We need to consider that for all providers now in exchange for 2-sided (or balanced) settlements.

The quote from the court In the 2nd para) demonstrates that the FCC has had a long line of ineffective chairs - from Powell to K-Mart to Genachowski. With broadband being the blood of the Internet economy currently keeping America afloat, this doesn't bode well.

My understanding is that the FCC could go back to its 2003 decision to reclassify T2 common carrier services as T1 info services, even though unlikely and politically improbable of success. Is that option at least theoretically open, or the court shut it down too?

About Me

Rob Frieden serves as Pioneers Chair and Professor of Telecommunications and Law at Penn State University.He also provides legal, management and market forecasting consultancy services and has written four books, most recently Winning the Silicon Sweepstakes: Can the United States Compete in Global Telecommunications published by Yale University Press. Rob has written over one hundred articles in law reviews and telecommunications policy journals and has provided commentary in a variety of trade periodicals. He updates a major communications treatise: All About Cable and Broadband (Law Journal Press).

Rob has held senior policy making positions in international telecommunications at the United States Federal Communications Commission and the National Telecommunications and Information Administration.In the private sector, he practiced law in Washington, D.C., and served as Assistant General Counsel at PTAT System, Inc. where he handled corporate, transactional and regulatory issues for the nation's first private undersea fiber optic cable company. Professor Frieden holds a B.A., with distinction, from the University of Pennsylvania (1977) and a J.D. from the University of Virginia (1980).